ald irregular update, page-2

Certainly endorse Ajostu views on ALD. I (after being badly stung) keep away from explorers and only wish to be involved with Gold miners who are making money (or about to make money)from a mill (preferably more than one). In ALD's case with a P/E of about 3 there is plenty of potential upside. One of my axioms in investing is to always look for a company which is "down on its luck" but with prospects and is actually solvent now (i.e not living on shareholder money). Another feature I look for is when the old COE has moved on (not clear that this has happened at ALD) and a "new" man has taken over the job. It is only natural in those circumstance to "bag the old guy" by bringing out all the problems and make yourself look a hero when thing are not "as bad as it was thought".

This is at odds with my financial advisor who likes to select companies which are "top of the class" and big (i.e in the ASX 100/LSE 50). My view is that big companies grow very slowly and the if the company is "top of the class" the only way is down.

It seems to me that ALD is in "elephant country" regarding gold resources and has actually done comparatively little exploration in world class locations (but ones with sovereign risk). By having 2 mills and locations they also have redundancy in the event of mechanical failure (as we had with the ball mill). I also hedge against the risk the Australian government may extend MRRT to gold on my local junior gold miner investments at some future date.

To date Simberi has failed to "come up with the goods" but if management get their house in order (and they have demonstrated that at Gold Ridge) then Simberi has the good prospects as I speculate (DYOR) that a large resource is in the area around the existing pits and also on the other Tabar islands. To date management (and LT shareholders) have been lucky in that if the PoG had stayed where it was in mid 2008 when Simberi was commissioned we would probably have gone bust with the interruptions and blow outs in the costs of production. IMHO we have been saved by the escalating PoG and getting out of a disastrous hedging arrangement.

I did not like ALD's "slight of hand" in increasing resources by reducing the cut off grade to .5g/ton when more prudent miners would take .8 - 1 g/ton as being their minimum. On this basis I feel that ALD current resources are exaggerated, but there is potentially still a lot to be found in the area. You also have to bear in mind that a lot of the existing resource are sulphides which will require approx $250m investment in autoclave and concentrators to process (some investment is also required for extraction of the Silver content of the resources).

This is all my own opinion and may all be rubbish - DYOR.